On April 5, 1887, the Village of Skaneateles granted a franchise
to the waterworks company to maintain and operate within the
village a system of waterworks for furnishing pure and wholesome
water to the village and its inhabitants, under which the company
constructed its works, and on February 1, 1891, contracted to
supply water to the village and its inhabitants for the period of
five years. At the expiration of the term of this contract, some
differences arose about the terms of its continuation, which
resulted in the construction of an independent system of waterworks
by the village authorities. In an action brought by the water
company to restrain the village authorities from proceeding with
the construction of that system or any other system for the
village, it is held by the New York court (1) that the village was
not required to institute proceedings to condemn the property of
the plaintiff before commencing the construction of a waterworks
system for the use of the village; (2) that the waterworks company
under the contract did not acquire the exclusive right to furnish
the village with water; (3) that, subsequently to the termination
of the contract, no contractual relations existed between the water
company and the village:
Held:
(1) That the power of this Court to review the judgment of the
New York Court of Appeals is limited to a consideration of whether
any right of the plaintiff's protected by the federal Constitution
has been denied.
Page 184 U. S. 355
(2) That the water company, in applying to the village and
filing its certificate with the Secretary of State under the act of
1873, acquired no contract right, express or implied, to any
exclusive privilege of using the streets of the village for
supplying it with water.
(3) That, by virtue of its incorporation, it secured simply the
right to be a corporation and the authority to lay its water pipes
in any of the streets and avenues or public streets of the village
of Skaneateles.
(4) That when the contract for five years had expired, there was
nothing in the state legislation upon which to base an implied
contract.
(6) That the decrease in the value of the property of the
waterworks company caused by the exercise by the village of its
right to build and operate its own plant furnishes no foundation
for the plaintiff's claim.
This is a writ of error to the Supreme Court of the State of New
York, the record having been remitted to that court from the Court
of Appeals after the hearing of an appeal to the latter court and
an affirmance by it of the judgment appealed from. 161 N.Y.
154.
The action was brought by the water company to restrain the
Village of Skaneateles and the individual defendants, its officers,
from proceeding further with the construction of a waterworks
system, or from doing anything in furtherance of the construction
or operation of any system of waterworks for that village. The
plaintiff claimed that the village ordinance under which the
proposed action on the part of the village was taken was void as
impairing the obligation of a contract between plaintiff and the
village; also, that its action, if continued, would result in the
taking of plaintiff's property without due process of law, that the
action of the defendant, if permitted, would result in the taking
of private property for public use without compensation, and that
such legislation denied to plaintiff the equal protection of the
laws.
The defendants answered denying the contentions of plaintiff,
and the case was referred to a referee for trial, who, after
hearing the parties, reported that the defendants were entitled to
judgment dismissing the complaint upon the merits, with costs, and
judgment was thereupon entered which was affirmed by the appellate
division of the supreme court of the state and upon appeal by the
Court of Appeals.
Page 184 U. S. 356
As matters of fact, the referee in his report found that the
plaintiff was a domestic corporation organized under the act of
1873, c. 737, and the several acts amendatory thereof; that the
Village of Skaneateles was a municipal corporation and the
individual defendants were respectively the president, water
commissioners, and trustees of the village. On April 5, 1887, the
village granted a franchise to the plaintiff to maintain and
operate within the Village of Skaneateles a system of waterworks
for furnishing the village and its inhabitants pure and wholesome
water upon the terms and conditions stated in the franchise. The
plaintiff constructed the waterworks under this franchise and
completed it about the year 1889 and put the same in operation;
that the system was a complete and adequate one, no complaint
having been made that the water furnished by the plaintiff was not
pure and wholesome or that it had been inadequate for the purposes
for which the system was erected. Prior to this time, the Village
of Skaneateles was not supplied with water by any company or
corporation, nor did it possess any system of its own; that, since
its incorporation, and for the purpose of carrying on its works,
the plaintiff had encumbered its property by mortgages to secure
the payment of bonds issued by it, which bonds were outstanding at
the time of the trial. After the erection and completion of the
waterworks and on February 1, 1891, the plaintiff and defendants
entered into a contract for the supply of water and the erection of
hydrants and for the payment of certain compensation therefor by
the defendants; that such contract was limited by its terms to the
period of five years from February 1, 1891, and that it has not
been renewed since the time of its expiration on February 1, 1896;
that after such time, without any proceeding to vacate or annul the
franchise of the plaintiff or to dissolve the corporation, the
defendant Leslie, as president of the village, appointed some of
the other defendants to be water commissioners of the village,
having in contemplation the purpose of constructing for said
village a waterworks system of its own; that the persons so
appointed commissioners entered upon the performance of their
duties, called a meeting of the electors of the village, who voted
in favor of municipal
Page 184 U. S. 357
ownership of the waterworks, and after such election, the water
commissioners issued or caused to be issued bonds of the village to
the amount of $30,000, which they sold for the purpose of obtaining
money to construct a waterworks system of its own; that the board
of water commissioners of the village have entered into a contract
for the construction of waterworks for said village, and have
expended thereon about the sum of $24,000, and the works are
substantially completed; that all of the proceedings were taken
without instituting any proceeding to condemn the property of the
plaintiff herein, although the plaintiff offered to participate in
a proceeding looking towards the condemnation of its property; that
the works of the plaintiff were constructed at large expense and
its property rights and franchise mortgaged to secure its bonds
which had been issued, and the income of the plaintiff from the
operation of its plant had been insufficient to meet its outgoing
expenses, and will be insufficient to meet its outgoing expenses
when it shall cease be furnish water to the Village of
Skaneateles.
As conclusions of law, the referee held:
(1) That the Village of Skaneateles was not required to
institute proceedings to condemn the property of the plaintiff
before commencing the construction of a waterworks system for the
use of the village.
(2) That the consent of the Village of Skaneateles to the
organization of the plaintiff as a waterworks company, and the
making of a contract by the Village of Skaneateles with the
plaintiff for the supply of pure and wholesome water did not vest
in plaintiff the exclusive right to furnish said village with water
or prevent the village from granting to another corporation the
right to supply water within the said village or the village from
constructing and maintaining a waterworks system to supply itself
with water.
(3) That, subsequently to February 1, 1896, no contractual
relations existed between the plaintiff and the Village of
Skaneateles, and the village was not under legal obligation to
enter into any contract with the plaintiff after that date or to
continue to take water from the plaintiff, but was entitled to
construct and maintain a waterworks system of its own.
Page 184 U. S. 358
(4) That the defendants were entitled to judgment dismissing the
complaint upon the merits with costs, and judgment was ordered
accordingly.
Though not perhaps material upon the legal rights of the
parties, yet it is seen from correspondence found in the record
that, prior to the expiration of the contract in February, 1896,
the company gave notice to the village that it intended to increase
its rents for hydrants, etc., to fifty dollars, which sum was ten
dollars per hydrant more than it was entitled to under the
franchise granted it and twenty dollars more than the sum named in
the expiring contract. The village authorities refused to pay the
increase, and the water company, on learning it had under its
franchise the right to charge but forty dollars per hydrant,
reduced its demand, but the parties failed to agree, and the
contract expired. After its expiration, the company notified the
village that the hydrants had been closed and that there must be no
interference with them, even in case of fire. Both parties became
somewhat excited, it would seem, and it resulted in the village's
taking proceedings under chapter 181 of the Laws of 1875 and its
amendments for erecting and operating waterworks of its own.
MR. JUSTICE PECKHAM, after making the above statement of facts,
delivered the opinion of the Court.
The power of this Court to review the judgment of the New York
Court of Appeals is limited to a consideration of the question
whether any right of the plaintiff's protected by the federal
Constitution has been denied by the judgment. Whether the plaintiff
is entitled to relief under the facts disclosed in the record upon
general principles of equitable jurisdiction is not a matter for us
to inquire into so long as the question does not involve the
constitutional rights of the plaintiff.
Page 184 U. S. 359
The claim is made that the ordinance adopted by the authorities
of the Village of Skaneateles in 1896, providing in substance for
the erection and operation of a water system by the village, which
ordinance was passed pursuant to an authority of the legislature
under the act, chapter 181 of the Laws of 1875, and amendments
(giving authority to cities and villages to build their own
waterworks), impaired the obligations of the contract existing
between the village and the company. The contract to which
reference is made is not the one which was entered into in 1891
between these parties for the term of five years, because that
contract was fully carried out and had expired by its own
limitation in February, 1896, but it is the contract which the
plaintiff in error claims was implied by reason of its organization
and incorporation in 1887, in pursuance of an application made to,
and with the consent of, the village authorities, and under the
provisions of chapter 737 of the Laws of New York of 1873, and the
acts amendatory thereof. It is said the village, at the time of
plaintiff's incorporation, had the election to do the work itself
under the above act of 1875 or to confer upon a private company
like the plaintiff, under the act of 1873, the right to do it, and
when, with these two different methods for obtaining a supply of
water, the village chose that which called for a supply by a
private company, it impliedly contracted that it would not itself
thereafter take the other method for obtaining such supply unless
it bought the plant of the company or condemned it under the
provisions of the act of 1875. This, it is said, was implied in the
grant made by the village. Sections 1, 2, 3, 4, and 5 of the act of
1873, under which the plaintiff was incorporated, are set forth in
the margin. [
Footnote 1]
Page 184 U. S. 360
Under the act of 1875, c. 181, the village was authorized to
erect and operate its own works. Provision was made in the act in
detail for the organization of a board of water commissioners and
the building of waterworks, the mode of paying for the same, and
other matters connected with the supply of water. That part of the
twenty-second section of the act, in
Page 184 U. S. 361
regard to the taking of the property of a private company, is
set forth in the margin. [
Footnote
2]
Pursuant to the provisions of the act of 1873, certain persons
on July 5, 1887, applied to the village authorities for permission
to organize a water company to supply the village with pure and
wholesome water, and on that day the authorities granted the
request. On August 1, 1887, a certificate was duly filed in the
office of the secretary of state at Albany, by which the
corporation was formed under the name of the Skaneateles Waterworks
Company. Subsequently to the incorporation of
Page 184 U. S. 362
the plaintiff it built the waterworks and entered into a
contract with the village authorities to supply water to the
village for five years from February 1, 1891.
It would seem to be clear under the decisions of this Court that
the plaintiff, in applying to the village and filing its
certificate with the secretary of state under the act of 1873,
acquired no contract right, expressed or implied, to any exclusive
privilege of using the streets of the village for supplying it with
water.
Charles River Bridge Company
v. Warren Bridge Company, 11 Pet. 420;
Long
Island Water Supply Company v. Brooklyn, 166 U.
S. 685,
166 U. S. 696;
Walla Walla v. Walla Walla Water Company, 172 U. S.
1,
172 U. S. 13. The
Court of Appeals of New York held to the same effect in regard to a
provision in the charter of Syracuse relating to the rights of a
water company, the provision being similar to the charter here
involved.
Syracuse Water Company v. Syracuse, 116 N.Y.
167, decided in 1889; also
Matter of City of Brooklyn, 143
N.Y. 596,
aff'd in this Court, 166 U.S.,
supra.
Indeed, this proposition is conceded by counsel for the plaintiff,
and it admits that the village, notwithstanding its grant to the
plaintiff, possessed the power to grant to any other individual
company the same kind of privilege it had already granted to
plaintiff. But it denies the right of the village to avail itself
of the authority to itself build and operate the works, given under
the act of 1875, unless the plaintiff's plant be taken by purchase
or condemnation.
Having before it the above act of 1873, amended in 1877, the
Court of Appeals, in
People ex Rel. &c. v. Forrest, 97
N.Y. 97, 100, decided in 1884, said that
"the state authorized the formation of waterworks companies in
its towns and villages (Laws of 1877, c. 171), but it does not
require one so organized to supply water to the town or village,
nor does it require the town or village to take its supply of water
from the company so formed."
It is true that, by chapter 566 of the Laws of 1890, it was
provided that the water companies
"shall supply the authorities or inhabitants of any town or
village . . . [through which the conduits or mains of such
corporation may pass] with
Page 184 U. S. 363
pure and wholesome water at reasonable rates and cost,"
and the act provided that contracts might be made therefor. But
there was no provision making it incumbent upon the municipal
authorities to take water from any such company.
By virtue of its incorporation under this act of 1873, the
plaintiff secured simply the right to be a corporation and the
authority to lay its water pipes in any of the streets and avenues
or public streets of the Village of Skaneateles. The village,
however, as stated, was under no obligation to take water from the
company. That was a matter for subsequent contract between the
parties. Admitting that in every grant there is an implication that
the grantor will do nothing to detract from the full and complete
operation of the grant itself, we cannot find any implication that,
after the termination of the contract the plaintiff and defendant
were empowered to make, there should be no right in the defendant
to build its own system of waterworks under the statute of 1875
unless it purchased or condemned the property of the plaintiff.
There is no implied contract in an ordinary grant of a franchise
such as this that the grantor will never do any act by which the
value of the franchise granted may in the future be reduced. Such a
contract would be altogether too far-reaching and important in its
possible consequences in the way of limitation of the powers of a
municipality, even in matters not immediately connected with water,
to be left to implication. We think none such arises from the facts
detailed.
It is not amiss to here recall the situation at the time
plaintiff became incorporated, in 1887, under the act of 1873. That
act provided for the organization and incorporation of water
companies which might furnish water to cities, villages, and towns
of the state. There was also the act of 1875 (chapter 181) and its
amendments, granting to the village authorities the right to erect
and operate a water system of their own. There was the further
statutory provision (chapter 129 of the Laws of 1879, relating to
the municipality, and chapter 422 of the Laws of 1885, relating to
a water company), that the contracts to be entered into between the
water companies and the municipal authorities should not extend
beyond five years, unless
Page 184 U. S. 364
there was a vote of the electors authorizing a contract for a
longer period, but in no case longer than thirty years. Now, while
the parties are prohibited from contracting for more than five
years without a vote of the electors, which was not taken, how can
it be said that, when they contracted only for the time permitted
by the legislature, there was nevertheless an implied contract that
the village would never avail itself of the right provided by
statute, without purchasing or condemning the property of the
plaintiff? No such condition is stated in any statute. We cannot
see any solid foundation for the claim that there was a final and
conclusive election of methods by the village out of which sprang
the implied contract contended for, when the legislature at that
very time prohibited a contract for more than five years. It would
seem in the nature of things that the election of methods was for
no longer a time than the law permitted a contract to be made under
the method chosen by the village. After the expiration of that
time, we cannot see why the parties were not in the same condition
as to their respective rights that they were in before the contract
for the five years was made. Otherwise, we have the anomalous
condition that the village may grant unconditionally the franchise
to supply it with water to another private company while ceasing
and refusing to take from the old company, and yet it cannot erect
its own water system (unless it purchases or condemns the plant of
the plaintiff) because it chose to enter into a contract with
plaintiff for a supply of water by it for five years, although the
contract has expired by its own limitation and the parties are
under no legal obligation to renew it. We can appreciate the
argument that the village had no right to build and use its own
plant during the running of the five years' contract, but we fail
to see the force of the claim that, on account of once making a
contract with the plaintiff for five years, the village irrevocably
bound itself by an implied contract never to build its own plant
without taking by condemnation the property of the plaintiff if the
parties could not agree on terms of purchase. We cannot see the
logic of such contention.
The very fact that the taking of the plant of a private
existing
Page 184 U. S. 365
company was not made a condition for the exercise of the
authority to build, granted the village by the act of 1875, shows
there was no implied contract to take such property. The right to
build was specifically given to the village under the act of 1785,
whether any private company existed or not, and that right to build
was nowhere in the statute conditioned upon a taking by the village
of the plant of the private company. The act recognized the fact
that there might be an existing private company, and the
twenty-second section gave the village authority to take it, but
did not compel it. It therefore authorized the village to build and
operate its works without taking the plant of the private company.
Both these acts were in existence when the plaintiff was
incorporated under the act of 1873, and it took the chance of the
village thereafter availing itself of the act of 1875 to build and
operate, unconditionally, its own plant.
When the contract for the five years had expired, we look in
vain for anything in either of the statutes of 1873 or 1875 upon
which to base the implied contract contended for. The court below,
after careful consideration of the statute of 1875, came to the
conclusion that there was nothing in the language of the
twenty-second or any other section thereof compelling the village
to purchase or condemn the plant of the company, and that no
contract could be implied therefrom. Chief Judge Parker, in his
opinion in this case, 161 N.Y. 154, says:
"On the other hand, the appellant urges that the statute
authorizing village to supply themselves with water and permitting
the acquisition of the works of any private corporation that may be
supplying such municipalities with water, also makes it the duty of
the water commissioners to acquire the property of the existing
corporation or corporations. But, after a very careful examination
of the statute, it seems to us very clear that this is not so. It
is probable that the legislature mistakenly assumed that such
authorities would not act unjustly or oppressively, but would
recognize the property rights of others. Be that as it may, the
right to determine whether the property of an existing waterworks
corporation should be taken
Page 184 U. S. 366
or not is clearly submitted to the determination of the local
authorities. The refusal of the defendant, therefore, to acquire
the plaintiff's property by proceedings
in invitum does
not tend to support the plaintiff's claim for an injunction. The
defendant has done precisely what the statute authorizes, and all
that remains for the court to determine is whether the act was
within the legislative power or void because in contravention of
the organic law."
The judge then proceeded to discuss that question, and held that
the action of the village was legal. We concur in this view. The
language too plainly leaves it to the discretion and judgment of
the water commissioners, to permit of any other construction. Not
being bound by the statute to take the property of the plaintiff as
a condition of building its own plant, there is, as we have said,
no implication of a contract to do that which the statute itself
does not direct.
Reference was made on the argument to two Pennsylvania cases,
decided by the Supreme Court of that state. They are
White v.
Meadville, 177 Pa. 643, and
Metzger v. Beaver Falls,
178 Pa. 1. They decide what is the proper construction to be given
certain statutes of that state relating to municipal corporations,
and to water companies formed to supply them with water. The
actions were brought by taxpayers of the municipalities to restrain
the latter from erecting works of their own to supply water. The
court held that, under the powers given to the municipalities by
those statutes, they had not the right to erect such works unless
they took the plant of the water companies then operating such
plant. They did not hold there was any implied contract on the part
of the municipalities that they would so take the plant, or that to
operate works of their own without doing so would be a taking of
the property without due process of law or without making
compensation, or that it would be a denial of the equal protection
of the laws. The cases were maintained on equitable principles and
in favor of taxpayers who were complainants, and there was no
question of contract between the city and the water company upon
the basis of which the actions were permitted to stand. It was a
simple question of the powers granted to the
Page 184 U. S. 367
parties by the different statutes. The court said that, although
the city was not bound to become the owner of the works, it had no
power to destroy their value by duplicating them at the expense of
the taxpayers. A taxpayer was the plaintiff. The court decided no
federal question in either case. The statutes of New York are
somewhat different, and the state court has come to the conclusion
that, under them the village was not bound to take the plant of the
plaintiff. We agree in the view that there was no implied contract
to take the property of plaintiff, even though the village should
subsequently to the expiration of the written contract erect its
own water system.
It is also plain that, as there was no contract such as is
claimed by the plaintiff, the action of the village has not
resulted in the taking of any of the property of the plaintiff
without due process of law or without compensation. It has not
taken any of the property of the plaintiff in any aspect of the
case. Its action may have seriously impaired the value of the
plaintiff's property, but it has taken none of it, and such
decrease in value, caused by the village exercising its right to
build and operate its own plant, furnishes, under the facts in this
case, no foundation for the plaintiff's claim.
Lehigh Water Co.
v. Easton, 121 U. S. 388,
121 U. S.
390.
In
Pumpelly v. Green Bay
Company, 13 Wall. 166, the land of the plaintiff
had been overflowed by water under a claim of right under a
statute, and it was held that such continuous overflow and user
amounted to a taking of the plaintiff's property.
This is not such a case. The property of the plaintiff remains
wholly untouched. Its value has decreased because the village no
longer takes water from it, and the inhabitants will probably also
take their supply from the village works, but the plaintiff's
property has not been taken as that term is understood in
constitutional law. What the village ought to do in the moral
aspect of the case is, of course, not a question for us to
determine.
The Court of Appeals has held in this case that the provisions
in the statute for the taxation of the property of the company in
common with other owners of property to pay the obligations
Page 184 U. S. 368
incurred in the construction of the works by the village, and
all discriminating taxation of the patrons of the company, are
invalid.
See also Warsaw Waterworks Co. v. Warsaw, 161
N.Y. 176. The plaintiff is therefore freed from the obligations
imposed by those provisions.
The views above expressed show that there was no such contract
as claimed by the plaintiff, and consequently no impairment of the
obligations of any contract, and there has been no taking of
plaintiff's property, nor has it been denied by the state the equal
protection of the laws. The judgment of the Court of Appeals of New
York is right, and must therefore be
Affirmed.
[
Footnote 1]
"
Chap. 737, Laws of 1873"
"SEC. 1. Any number of persons not less than seven may hereafter
organize in any town or village of this state a waterworks company,
under the provisions of this act."
"SEC. 2. Whenever any persons to the number of seven or more
shall organize for the purpose of forming a waterworks company in
any of the towns of villages in this state, they shall present to
the town or village authorities an application setting forth the
persons who propose to form said company, the proposed capital
stock thereof, the proposed number and character of the shares of
such capital stock, and the name or names of the streams, ponds,
springs, lakes, or other sources and their locations, from which
water is to be supplied. Such applications shall be signed by the
persons who propose to form said company, and shall contain a
request that the said town or village authorities shall consider
the application of said company to supply said town or village of
this state, or the inhabitants thereof, with pure and wholesome
water. Upon the presentation of such application, the authorities
of any town or village, which authorities are for the purposes of
this act defined to consist for incorporated villages and towns,
the board of trustees and supervisor, and for all other towns, the
supervisor, justices of the peace, town clerk, and commissioner of
highways. Said authorities shall, within thirty days of the
presentation of said application, determine by a vote of a majority
of the authorities of said town or village whether said application
shall be granted, and the authorities of any town or village in
this state are hereby authorized and empowered to make such
determination, and when the same shall be made, to sign a
certificate to that effect, and immediately transmit the same to
the persons making such application or either of them. Duplicate
certificates of such determination shall be filed in the office of
the clerk of said town or village, and in the office of the county
clerk of the county in which said town or village granting such
application shall be situated. The persons named in such
application shall thereupon meet and organize as a waterworks
company under such corporate name as they may select. They shall
file in the office of the secretary of state a certificate of such
organization. Said certificate shall contain the name of the
corporation, the names of the members of said corporation and their
residences, the amount of capital stock, the location of the office
of said company. Such certificate shall be subscribed and sworn to
by the president of said corporation and shall be attested by the
secretary thereof. Upon the filing of said certificate, said
waterworks company shall be known and deemed a body corporate and
shall be capable of suing and being sued by the corporate name
which they shall have selected in any of the courts of this state.
The capital stock of said company shall be paid in the manner and
within the time provided by the 'Act to Authorize the Formation of
Corporations for Manufacturing, Mechanical, or chemical Purposes,'
passed February seventeenth, eighteen hundred and forty-eight, and
the several amendments thereto, and the stockholders of said
companies shall be personally liable for the debts of said
companies in the same manner and to the same extent as is provided
by said act and the amendments thereto."
"SEC. 3. Said corporation shall have power to take and hold real
estate for the purpose of their corporation, and may have, hold,
and occupy any of the waters of this state, provided, however, that
nothing herein contained shall be deemed to infringe upon any
private right which shall not have been the subject of an agreement
and lease or purchase by said corporation. Provided, that said
company shall have no power to take or use water from any of the
canals of this state or any canal reservoirs as feeders or any
streams which have been taken by the state for the purpose of
supplying the canals with waters."
"SEC. 4. Any corporation organized under the provisions of this
act may, and they are hereby authorized and empowered to, lay their
water pipes in any streets or avenues or public places, in any
streets or avenues of an adjoining town or village, to the town or
village where their application shall have been granted."
"SEC. 5. Said corporations are authorized and empowered to
supply the authorities or inhabitants of any town or village where
they may have organized with pure and wholesome water at such rates
and cost to consumers as they shall agree upon."
[
Footnote 2]
Part of Sec. 22, Chap. 181, Laws of 1875:
"SEC. 22. Whenever any corporation shall have been organized
under the laws of this state for the purpose of supplying the
inhabitants of any village with water, and it shall become or be
deemed necessary by the board of water commissioners herein
authorized to be created that the rights, privileges, grants, and
properties of such corporation shall be required for any of the
purposes of this act, the commissioners herein authorized to be
created shall have the power, and it shall be their duty, to make,
or cause to be made, a thorough examination of the works, rights,
privileges and properties owned or held by such corporations, or
any of them, and if such commissioners shall determine that said
works, rights, privileges, and properties are necessary for the
purposes of this act, they shall have the right to make application
to the supreme court. . . ."
The section then provides for taking the property by
condemnation.
